Oil prices slump $US4 in fierce sell-off

OIL prices have plunged more than $US4 a barrel, giving up the previous day's sharp gains and more, as markets reacted to gloomy EU economic forecasts.

The selloff came a day after the US election gave President Barack Obama four more years in office, with some worries evident over the potential for more policy deadlock as the extremely austere "fiscal cliff" spending cuts and tax hikes loom.

But the main impetus for the fall was new signs of worry over the eurozone economy, including comments by the European Central Bank chief.

"Sentiment turned sour on Mario Draghi's comments about the eurozone economy and after some disappointing data releases," said analyst Fawad Razaqzada at trading group GFT - referring to the European Commission's slashing its growth forecast for the eurozone across the board.

"There are concerns about Europe again," said James Williams of WTRG Economics.

In New York trade, WTI crude for December delivery lost $US4.27 from Tuesday's close, settling at $US84.44 a barrel.

In London, Brent North Sea crude for December dropped $US4.25 to $US106.82 a barrel.

In addition, the US government's Energy Information Administration reported Wednesday that American crude inventories had climbed 1.8 million barrels in the week ending November 2, a possible sign of weaker US demand.